Date post: | 03-Apr-2018 |
Category: |
Documents |
Upload: | nazir-ahmed-zihad |
View: | 217 times |
Download: | 0 times |
of 17
7/28/2019 Organization of MBL
1/17
Chapter: - 02 The Organization
4 |P a g e
2.1History of the MBL: -
Mercantile Bank Ltd (MBL) was incorporated in Bangladesh as a Public Company, Limited by
shares under the Companies Act 1994 as on May 20, 1999 and subsequently obtained Banking
Operation License from Bangladesh Bank under the Bank Companies Act 1991 and commenced
commercial operation on 02 June 1999 to provide efficient banking services and to contribute
socio-economic development of the country. The bank has 42 branches and 3 SME service
center. It has listed in the Stock Exchanges at Dhaka and Chittagong in 2003 and 2004
respectively.
The Founder of MBL is committed to make it a little more different and a bit special
qualitatively. This bank has new vision to fulfill and a new goal to achieve. The bank has been
manned with talented and experienced personnel equipped with most modern technology so
as to make it most efficient to meet the needs of 21st century. The Head Office of the Bank
situated at 61, Dilkusha commercial Area, Dhaka. The Board of Directors consists of eminent
personalities from the realm of commerce and industries of the country.
The Authorized Capital of the Bank is Tk.3000 million and the Paid -up Capital is
Tk.1498.89million.The Bank provides a broad range of financial services to its customers and
corporate clients
It has a large asset position comprising of Tk. 44940.54 million in December 2007.
2.2Vision, Mission, Objective, Values
2.2.1Vision
Would make finest corporate citizen
2.2.2 Mission
Will b become most caring, focused for equitable growth based on diversified deployment of
resources, and nevertheless would remain healthy and gainfully profitable Bank.
7/28/2019 Organization of MBL
2/17
Chapter: - 02 The Organization
5 |P a g e
2.2.3Objective
2.2.3.1 Strategic objective:-
To achieve positive Economic Values Added (EVA) each year.
To be market leader in product innovation.
To be one of the top three Financial Institution in Bangladesh in terms of cost
efficiency.
To be one of the top five Financial Institution in Bangladesh in terms of market share
in significant market segment we serve.
2.2.3.2 Financial objective:-
To achieve 20% return on shareholders equity or more, on average.
2.2.4Values
For the customer: - Providing with caring service by being innovative in the development of
new banking products and service.
For the shareholder: - maximizing wealth of the bank.
For the community: - Strengthening the corporate values and taking environment and social
risk and rewards into account.
2.3Board of Director: -
The Board of Directors being at the highest level of organizational structure plays an important
role on the policy formulation. The Board of Directors is not directly concern with day-to-day
operation of Bank. They had delegated their authority to the Managing Director and CEO to
look after the day-to-day affairs of the Bank.
The Bank is running by an excellent management team under the direct supervision of a
competent Board of Directors. The Board of Directors comprises total thirteen members, which
is within the maximum limit as imposed by BPRD circular-12, dated April 26,2003of Bangladesh
Bank, headed by the Chairman. Md. Abdul Jalil, is the present Chairman of the Board. The
Managing Director (MD) and CEO head management team. Mr. Dewan Mujibur Rahman is the
present Managing Director and CEO of MBL.
7/28/2019 Organization of MBL
3/17
Chapter: - 02 The Organization
6 |P a g e
The management hierarchy of Mercantile Bank Limited is given below:
Figure: - The management hierarchy of MBL
Board of Directors
Managing Director
Additional Managing Director
Deputy Managing Director
Senior Executive Vice President
Executive Vice President
Senior Vice President
Vice President
First Vice President
Asst . Vice Presi den t
First Asst. Vice President
Senior Principal Officer
Principal Officer
Senior Officer
Officer
Junior Officer
Assistant Officer
7/28/2019 Organization of MBL
4/17
Chapter: - 02 The Organization
7 |P a g e
2.4Various committees: -
7/28/2019 Organization of MBL
5/17
Chapter: - 02 The Organization
8 |P a g e
2.5Departmental activity: -
Cash department
This section provides three services that are as follows:
Cash Received
Cash Payment
Online Banking Services
Cash Maintenance
Cash Received
The authorized officer receives cash from customers as for MMS, Savings, Current, and other
Bills. All cash received is kept in registered book with account holders name, account number,
date, and amount.
Cash Payment
The authorized officer payments cash to customers against cheque, bank cash received online
payment. All cash payments are kept in registered book with account holders name, account
number, date, amount, cheque number.
Online Bank Service and Computer Posting
MBL all branches are now using their own online. Anyone can now draw a cheque and receive
money from any branch or can save money to his/ her account from any branch. This servicemake peoples life easy going.
Cash Maintenance
In the mean time the authorized officer keep record of money in the registered book.
7/28/2019 Organization of MBL
6/17
Chapter: - 02 The Organization
9 |P a g e
Clearing department
Clearing
This section mainly works with different type of cheque. Customer submits his/ her cheque to
receive money. The authorized officer put seal on the customers copy. And then the officer
received cheque and post in the computer to take document. Clearing division submit all the
cheques to the Bangladesh bank. Here Bangladesh Bank is the called the clearing house.
For clearing a bank receives cheque, demand draft, and pay order from its clients. When the
instrument is put in the bank for clearing, the authorized officer check out the following things:
Date
Amount
Account Number
Make ensure instrument issuing date not exceed six (6) months
When everything will be ok the authorized officer put the seal on the instrument.
Return Cheque
In the mean time of the clearing some instrument may be returned. The cheque can be
returned for the following reasons:
Insufficient fund
Payment stop by drawerpayees endorsement irregular/ illegible/ required
payees endorsement irregular required banks confirmation
Draws signature differ/ required
Cheque is past dated, out of date/ multi date
Amount in figure and word is not same
Clearing stamp required/ requires cancellation
Bangladeh Bank
[Clearing House]
Authorised Bank
MBL
7/28/2019 Organization of MBL
7/17
Chapter: - 02 The Organization
10 |P a g e
Accounts department
Accounts department is most important for the bank. In accounts department maintains all
types of accounting procedure.
Function of the accounts department
Prepare daily statement of the affairs
Prepared supplementary
Prepare daily, weekly, quarterly and half yearly and annual statement of the bank
Reconciliation of the IBTA
Prepare advice
Prepare income and expenditure statement
Maintain the office stationary
Maintain all administrative work
Foreign exchange department
Foreign Exchange
Foreign exchange is divided into two parts as export and import. Earning foreign currency
government always encourages business people. Bank here help us to do the business with
outside of the country.
Export
Exporting product, all have to maintain some procedure through the bank which is describing
bellow.
Export Registration
Firm have to submit the following documents for obtaining ERC to export and import bureau.
Nationality certificate
Bank Certificate
TIN (Tax Identification Number
Trade License
If it is partnership business then have to submit the deed agreement. And if it islimited company have to submit the memorandum or articles of association.
7/28/2019 Organization of MBL
8/17
Chapter: - 02 The Organization
11 |P a g e
Export Order
After receiving the ERC, the exporter try to contact with the buyer through the correspondent
bank or directly. When they accept to buy the product there created the contact between the
export and the buyer. In the contact they mention the product price, the quantity, value of
commodity quoting FOB, CIR etc.
Letter of Credit
L/C which is called at sight mentioned when the importer receive document they pay all dues
to the bank. L/C which is called Usance mentioned when the importer sell product they pay
all dues to the bank MBL concern about the L/C facility by offering three types of L/C that are as
given bellow.
Cash L/C (for import)
Back to Back L/C and Local L/C created against master L/C (Export)EPZ (Export Processing Zone
Cash L/C
L/C is undertaking by the applicant bank to the beneficiary on behalf of applicant. It is one type
of security for the importer. Bank gives guaranty to the exporter on behalf of importer. Bank
gives guaranty to the exporter that if importer fail to keep the agreement then bank is liable to
pay the money to the exporter.
Back to Back L/C
When contact is made the exporter will be understood that they must be followed the terms
and condition in future avoiding conflict.
If issuing bank is not trustable then the third bank is obtained.
What type of L/C it must be mentioned by the advising bank.
The terms and condition must be clearly mentioned.
If L/C is transferable then it must be mentioned in L/C.
Ensure that the L/C is valid.
It must be mentioned that if the terms and condition would be changed.
7/28/2019 Organization of MBL
9/17
Chapter: - 02 The Organization
12 |P a g e
Documents to Open L/C
For opening L/C the applicant must submit the following documents:
Properly fulfill the LCAF (Letter of credit Authorized Form) form.
Performa Invoice.
Insurance Coverage.
Submitting the application to open the L/C.
Credit report.
TIN (Tax Identification number) number
Trade License
IRC (Import Registration Form)
IMP Form.
Accounting Function of L/C opening
Bank maintenance the following registrar to open and close the L/C:
IRC register
LCA issued registered
L/C opening registered
L/C liability and margin register
Shipping indemnity register
Bill of entry register
Export register
PAD (Payment against Document) liability register
Foreign bill purchase registerOutward bill for collection register
Balance book
L/C advising register
Credit department
Credit
The word credit is derived from the Latin word Credo, meaning I believe. It is usually defined
as ones ability to buy with a promise to pay. From the bankers point of view, Credit is the
confidence of the lender on the ability and willingness of the borrower to pay the debt as per
the schedule of the repayment. For this banking is the term as business of confidence.
7/28/2019 Organization of MBL
10/17
Chapter: - 02 The Organization
13 |P a g e
Before allowing credit facility a banker should be satisfied that the applicant qualities the
following five essentials which may be term as 5 Cs namely.
CharacterBrowers Integrity, Honesty and Intention to repay the loan money
CapacityBorrowers business ability, particularly profit making report.
Capita Financial Strength to cover a business risk.Conditions it is general business condition
CollateralBorrowers ability to produce additional securities.
Forms of Advance/ Credit
MBL makes advance in different forms. All types of credit facilities can be classified into two
groups:
Funded Credit
Loans
Cash credit (CC))
Overdraft (OD)
Consumer Credit Loan
Agriculture Loan
Lease financing
Import Financing (LIM, PAD)
Export Financing (Packing Credit, Trust Receipt etc.)
Non Funded Credit
Letter of Credit (L/C)
Process of Loan Sanction
Step 1Loan interviewing/ selection of borrower
Borrowers identity
Family Background
Reputation Business Circle
Friends
CompetitorsEmployees
Qualification
Experience
Physical Fitness
Earnings
Securities Offered against the Loan
Own Stake in Business
7/28/2019 Organization of MBL
11/17
Chapter: - 02 The Organization
14 |P a g e
Eagerness
Expected terms of Repayment
Other Sources of Income
Normal Expenditure for maintaining his family
Knowledge/ Experience to run the business project etc.
Step 2 The second step start when the client submits formal loan application to the banker
duly signed with relevant papers.
Step 3 Banker will properly scrutinize the loan case and collect and correlate the information
about the party/ firm/ company/ project from available sources.
Sources of Information
Loan Application
Market Report
Study of Accounts
Financial statements
Spot Verification of Factory/ Office/ Collateral Offered
Confidential Reports from Other Bank
CIB of Commercial Bank
Other Sources like Press Reports Regarding Purchase, Sale Auction, Decrease etc. of
Properties
Registration Records
Municipal Record
Registration of Joint Stock Companys Record
Step 4 Preparation of Credit Report: Performa (Proprietorship/Partnership):
Name
Address
Date of Compilation of Report
Nature of the firm & Date of establishment
Nature of business
Investment in the business
Allied or subsidiary concern, if any
Brief history regarding the proprietors/partnersAnnual income
Sales
Market Reputation
Means
Bank account & our experience
Name of the other banks & their experience, if any
Preparation & signing of the Credit Report
7/28/2019 Organization of MBL
12/17
Chapter: - 02 The Organization
15 |P a g e
Step 5Managers decision about the suitability of the proposed loan/advance.
Step 6 Assessment:
Organization & ManagementMarketing Aspect
Technical Aspect
Financial Aspect
Economic Aspect
Sensitivity Analysis
ARA
Step 7Recommendations
Step 8
Sanction
Step 9Sanction advice & other terms & conditions
Step 10Repayment & Repayment Schedules
Step 11Interest rate. Etc.
Types of Loan
Care Loan (Staff), SOD against FDR, SOD against (Work Order), SOD against (Scheme), SOD
General Others, House Building Loan (Commercial), Lease Finance, Hire purchase, Pad (Cash), CC
(Hypothecation), Small Loan Scheme (SLS), FDBP (LOCAL), House Building Loan (Residential),
Personal Loan (Only For Bankers), Personal Loan (STAFF), Small Enterprise Loan (SME), Car/
Microbus, Television, Refrigerator/ Air Conditioner, Computer/ Accessories, Washing/ Swing
Machine, Furniture, Car/ Auto Loan, Home Loan, Term Loan, Time Loan.
7/28/2019 Organization of MBL
13/17
Chapter: - 02 The Organization
16 |P a g e
2.6Corporate Social Responsibility
Despite stiff competition in the Banking industry, we consider it essential for a company to
behave in a responsible manner towards both the environment and society. This belief exists on
two pillars. First, to be successful on a long term basis, we need to trust our stakeholders-
customers, shareholders, employees, patrons and well wishers and society. Behavingresponsibly towards society and the environment strengthens this trust. Second, by taking
ecological and social risks and reward into account, we strengthen our corporate values. Our
commitment has always been to behave ethically and to contribute towards changing the
quality of life of our people, the local community, and generally the society. Our Corporate
Social Responsibility focuses on:
Environment
As a bank we finance mainly in those projects, which are environment friendly. Earlyrecognition of ecological risks in an integral part of credit evaluation system of mercantile bank
limited. Ecological damage will eventually harm not only the community but also, mercantile
bank limited, in the form of loan losses or image problems. In this regard, we have sent to
officials to The Hague, Netherlands for training on Environment and social management Course
for Financial Institutions conducted by FMO Netherlands.
Sustainable Banking Products
We have for introduced a number of banking products for people who have traditionally been
excluded from the banking services. We have introduced Women Entrepreneurs Development
Scheme for the women who have experience but do not have seed capital to start business.
We have agreement with Women Entrepreneurs Association, Bangladesh (WEA) to encourage
women Entrepreneurs to come forward in the business. We have agreement with Women
Entrepreneurs Association. We have SME banking products for marginal people. Small and
marginal severs are encouraged to use banking services and attractive rates of interest are
offered smaller severs as well.
Supporting Education
Our bank offers financial awards to MBM (Masters in Bank Management) students at
Bangladesh Institute of Bank Management (BIBM) who excel in their studies. We also
contribute to academic research. We have contributed BDT 1.00 million to Bangla Academy for
research in Bengali Literature.
7/28/2019 Organization of MBL
14/17
Chapter: - 02 The Organization
17 |P a g e
Supporting Sports and Culture
Mercantile Bank Limited has promoted a number of non-profit initiatives. We sponsored
National Chess Championship, Swimming and Tennis Competition. We have sponsored a
number of Cultural programs to supports different comminutes.
Supporting Flood and Cyclone Sidr affected people
Mercantile Bank Limited has contributed a substantial amount of money for Flood and Cyclone
Sidr affected people of the Country to the relief fund of Hon able Chief Adviser and Army
Chief. The Bank also distributed relief in different areas for Flood victims.
Mercantile Bank Foundation
The bank has to set up Mercantile Bank foundation for extending charitable and beneficial
social services to the society. The bank contributes 1% of operating revenue or BDT 4.00 million
to Mercantile Bank Foundation every year. The foundation has been established with the
following objectives:
Mercantile Bank Foundation awards 8 (eight) eminent personalities of the country
every year for the outstanding contribution in the field of Economics and Economic
Research, Bengali Language and Literature. Medical and Science % Technology, and
Commerce.
Conducting research on Bengali language and literature.
Book Purchase and Distribution to encourage writers and publishers of the Country.Donation for Handicapped artists, litterateur, and distressed people.
Undertaking Project for the development of under-privileged children.
We will remain committed to fulfill the role of good corporate citizenship in 2008 and beyond.
7/28/2019 Organization of MBL
15/17
Chapter: - 02 The Organization
18 |P a g e
2.7Summary of the financial reports: -
Net interest margin
Return on assets.
Return on equity.
2002 2003 2004 20052006
20072008
3.16% 3.36% 3.24%3.05%
2.73%
3.52% 3.72%
20022003 2004 2005
20062007
2008
1.74%
1.24%1.47% 1.46% 1.50%
1.32%1.22%
2002 2003 2004 20052006
20072008
40.05%
22.49% 21.91% 21.12% 21.48%18.19%
16.27%
7/28/2019 Organization of MBL
16/17
Chapter: - 02 The Organization
19 |P a g e
Financial summary for four years of Mercantile Bank,
Particular 2005 2006 2007 2008
Income statement
Interest income 2720.38 3498.67 4450.90 5604.36
Interest expenses 1987.16 2662.58 3159.30 4045.97
Net Interest income 733.22 836.09 1291.60 1558.39
Non- Interest income 752.13 1132.74 1110.05 1273.14
Non- Interest expenses 518.12 790.07 1016.51 1250.02
Net Non- Interest income 234.01 342.67 93.54 23.12
Profit before provision and tax 967.23 1178.76 1385.15 1581.51
Profit after provision before tax 703.33 970.12 1198.84 1281.68
Profit after tax 386.83 494.22 540.50 615.88
Balance sheetAuthorized capital 1200.00 3000.00 3000.00 3000.00
Paid up capital 999.27 1199.12 1498.90 1798.68
Total capital 2045.85 2554.29 3387.17 4183.87
Deposits 25087.43 33332.65 39348.00 49538.36
Loan and Advance 21857.05 26842.14 31877.86 41993.95
Investment 3517.68 5407.90 7099.97 7690.12
Fixed asset 366.80 467.99 593.20 683.00
Total asset 28890.48 37159.65 44940.54 55928.72
Foreign exchange business
Import 33271.90 42442.80 40380.10 56528.80
Export 24108.57 34592.10 32670.10 43108.50
Remittance 679.10 2989.10 3510.40 4722.90
BIS capital measure
Total risk weighted asset 19693.04 23919.86 29036.56 40634.58
Core capital 1829.19 2252.63 2929.30 3470.92
Supplementary capital 216.66 301.66 457.87 712.95
Tier 1 capital ratio 9.29% 9.24% 10.09% 8.54%
Tier 2 capital ratio 1.11% 1.10% 1.26% 1.58%
Total capital ratio 10.39% 10.68% 11.67% 10.30%
Credit quality
Non-performing loan 905.74 1017.99 893.99 1242.47
Provision for unclassified loan 214.34 299.34 361.03 438.20
Provision for classified loan 523.00 594.00 563.35 578.20
7/28/2019 Organization of MBL
17/17
Chapter: - 02 The Organization
20 | P a g e
% of NPLs to total loan & advance 4.14% 3.79% 2.80% 2.96%
Share information
Share price(BDT) 390.75 355.25 415.61 348.25
No. of share outstanding(`000) 992.66 11991.19 14988.98 17986.78
Earnings per share(EPS)(BDT)Basic 32.26 32.97 30.05 34.24
Diluted 32.26 32.97 30.05 34.24
Dividend per share(BDT) 25.00 25.00 20.00 20.00
Cash(BDT) 5.00 - - -
Stock% 20.00 25.00 20.00 20.00
Dividend yield 6.40% 7.04% 4.81% 5.74%
Dividend payout ratio 64.58% 60.65% 55.46% 58.41%
Market capitalization 3904.63 4259.87 6229.57 6263.89
Book value per share 204.74 213.01 225.98 232.61Market value book value multiple 1.91 1.67 1.84 1.50
Price earning (Times) 10.09 10.77 11.53 10.17
Operation performance ratio
Net interest margin 3.05% 2.73% 3.52% 3.72%
Net non-interest margin 0.97% 1.12% 0.25% 0.05%
Earning base in asset 90.40% 88.49% 88.35% 91.84%
Operating efficiency ratio 72.15% 74.54% 75.09% 77.00%
Cost income ratio 34.88% 40.13% 42.33% 44.15%
Credit deposit ratio 91.68% 80.53% 81.02% 84.77%
Cost of fund 8.42% 9.00% 8.75% 9.19%
Yield on loans and advance 11.80% 12.21% 12.80% 13.24%
Spread 3.38% 3.21%4.05 4.05% 4.05%
Return on asset 1.46% 1.50% 1.32% 1.22%
Return on equity 21.12% 21.48% 18.19% 16.27%
Equity multiple (Times) 14.12 14.55 13.27 13.37
Other information
No. of Branch 28 35 41 42
No. of employee 663 879 945 1115
No. of foreign correspondents 266 306 584 586